Omni Bridgeway (ASX:OBL) executives said the company delivered a “positive” first half of FY2026, pointing to strong completion activity, growing fee income, and continued cost discipline, while also acknowledging that fundraising timelines remain partly dependent on external parties.
First-half performance and key metrics
Chief executive Raymond van Holst said the company was “tracking at or about on our KPIs,” reiterating a focus on raising fee income while keeping operating expenses materially below budget. He described a “flywheel” driven by co-investment and the ability to grow fund capital and assets under management, with scale expected to improve cost efficiency over time.
- Investment proceeds: AUD 7 million for the half, according to van Holst’s summary of key numbers.
- Statutory NPAT: AUD 84.5 million for the half.
- Return on equity: 22% for the half on an annualized basis, management said.
- Book value per share: up 7% for the half to AUD 3.20 per share, with van Holst noting the shares continued to trade at a discount to book value.
The company reported elevated completion activity in the period, with 45 full and partial completions. Management cited a multiple on invested capital (MOIC) of 2.6x and a 107% fair value conversion ratio to cash proceeds, emphasizing that conversion should be assessed at a portfolio level rather than on individual matters.
Portfolio update: diversification, fair value movements, and FX
Van Holst said the portfolio remains broadly diversified across regions and legal finance sub-strategies, describing that as a differentiator for Omni Bridgeway and a mitigant against adverse developments in any single region or area of law. He said the 10 largest investments represented 13% of commitments and 24% of fair value, adding that sidecar capital can help manage concentration risk while still generating management fees and supporting returns on capital and equity.
Management said commitments stood at AUD 5.5 billion, up 5% since June 2025, and total portfolio fair value was about AUD 3.8 billion, including approximately AUD 800 million attributable to “OBL only” carried interest entitlement.
Discussing fair value movements, the company pointed to several drivers during the half:
- Discount unwind: reflecting the passage of time as investments mature.
- Material litigation events (MLEs): management cited a negative AUD 63 million adjustment, which it said was less than 2% of the total portfolio. Van Holst said such developments can involve a mix of changes, often tied to updated court schedules, settlements, or claim values.
- Foreign exchange: the company recorded a negative AUD 133 million impact tied to U.S. dollar movement against other major currencies.
Income, fee growth, and operating expenses
Chief financial officer David Breeney said statutory income totaled AUD 179.5 million, which he attributed to strong portfolio growth and fair value movement. He also discussed the shift in group reporting following transactions and fund deconsolidations, noting that funds were treated as financial assets measured at fair value under IFRS, and that the “OBL-only fair value P&L” is used internally to help manage performance.
On earnings, Breeney reported AUD 24.7 million in EBIT for the half and “realized EBIT” of AUD 21 million, which he said was driven by successful completions and increased fee income. He added that unrealized income was positive even after the period’s negative FX impact.
On costs, Breeney said cash operating expenses were AUD 34.4 million, down from prior levels due to cost-management measures previously implemented. He said operating expenses are expected to finish below the FY2026 budget of AUD 80 million, while also indicating the company does not want to cut costs further to the point it would impair value creation.
Management also discussed a longer-term objective: achieving 70% cost coverage by FY2028, which Breeney called a key milestone. In the Q&A, executives described fee coverage as supported by a mix of management fee structures (including committed and deployed bases) and transaction fees, with the historical fee base continuing as newer funds contribute.
Fundraising, liquidity, and capital allocation
On capital formation, management said it reached an “important” level of external commitments for Funds 4 and 5, Series 2, and confirmed an additional AUD 2 million in sidecar capital during the half. Van Holst said the company remains on track for a full and final close, but noted timing depends on counterparties’ diligence and processes. In response to questions, he said the same parties remain involved and that the primary issue has been the length of the final diligence process rather than a change in commitment.
Breeney said the company ended the half with AUD 149 million in cash, up AUD 3 million since June 30, which he said was within expectations. He described the cash flow and liquidity profile as probabilistic given it is driven by “300+ underlying matters.” He also referenced scenario analysis, including a Monte Carlo approach to frame ranges of potential outcomes.
Van Holst reiterated the company’s capital allocation approach of maintaining net liquidity within a 12- to 24-month bandwidth while it works through legacy balance sheet liabilities, adding that once investment proceeds lift liquidity above that range, management would consider capital distribution options. He said the company was not yet at that point but described progress toward it.
Strategy, AI, and management changes
Management said operational initiatives, including legal tech and software, are accelerating and should improve efficiency while keeping operating expenses at current levels. Van Holst also said the company’s carried interest program remains on track to be “fully completed” within the next few months, which he said would reduce administrative burden and improve investment efficiency longer term.
Executives characterized regulatory developments across key jurisdictions as generally positive, with governments highlighting legal finance as a tool for access to justice. They also addressed artificial intelligence, describing it as a major opportunity. Van Holst said AI can improve internal efficiency and modeling, support underwriting through better use of historical data, and potentially expand the addressable opportunity set if legal costs decline, which he said is often a limiting factor in case selection.
The company also announced leadership changes. Van Holst said Peter (full name not clearly stated in the transcript) will join the New York office as head of commercial strategy and capital solutions effective March 26, with a mandate spanning origination, underwriting, structured finance solutions, and support for capital markets activity. He also said Global Operating Officer Tom Glasgow will relocate to the Middle East to pursue regional growth opportunities while continuing to lead platform operations.
About Omni Bridgeway (ASX:OBL)
Omni Bridgeway Limited offers dispute and litigation finance services in Australia, the United States, Canada, Asia, Europe, the Middle East, and Africa. The company offers dispute funding solutions, including bankruptcy, commercial, intellectual property, investor recoveries, class/group actions, appeals, and whistleblower. It also provides arbitration financing; judgment enforcement; and distressed asset recovery solutions. It serves groups and individual claimants, law firms, liquidators, banks, creditors, corporations, sovereigns, and multilateral institutions.
